Download This PaperBankruptcy with Chinese Characteristics: Insolvency Administration in the People's Republic of China
American Bankruptcy Law Review 94:1, 2020
34 Pages Posted: 24 Apr 2020
Date Written: February 1, 2020
Abstract
The phrase “with Chinese characteristics” (zhongguo tese 中国特色) connotes Chinese adaptation of Western institutions, but with modifications to suit conditions in China. The People’s Republic of China Enterprise Bankruptcy Law (“EBL”) was adopted by the People’s Congress Standing Committee effective June 1, 2007. The law was intended to further economic reform and integrate China more fully into globalization. Much of it is based on U.S. and European bankruptcy law. In particular, key EBL provisions dealing with business reorganization were drawn directly from Chapter 11 of the U.S. Bankruptcy Code.
Notwithstanding the many similarities between China’s EBL and the U.S. Bankruptcy Code, bankruptcy in the PRC differs radically from bankruptcy in the U.S. Certain structural differences between U.S. and Chinese law partially account for this. But what is most significant is the pervasive influence of the Chinese Communist Party (“CCP”) and the cultural role of Confucian norms. These elements combine to create a uniquely Chinese bankruptcy regime that maintains local and national government control over the reorganization process in the interests of collective welfare and preserving social stability.
This article examines PRC bankruptcy law and compares its essential differences and similarities with the U.S. Bankruptcy Code. We then look at two important “Chinese characteristics” – the CCP and Confucian norms – than influence the adoption of western legal institutions in China, focusing specifically on bankruptcy law. We explore how these features have shaped contemporary bankruptcy administration in China into a regime that is entirely different from its counterpart in the United States.
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